1. An insurer owes to its insured the duty to act in good faith and without negligence. This
duty arises under the contract.

2. Generally, third parties who are strangers to an insurance contract cannot maintain an
action against an insurer for the failure to negotiate and settle a third party's claim against
the insured because the duty of good faith and fair dealing in the handling of claims runs
only from the insurance company to its insured.

3. If a trial court reaches the right result, its decision will be upheld even though the trial
court relied upon the wrong ground or assigned an erroneous reason for its decision.

CAPLINGER, J.: This is an interpleader action filed by Benchmark Insurance Company
arising out of a single-car accident in which its insured, Candi Atchison, was the driver of the
vehicle. The accident killed one passenger and injured three other passengers including Kayla
Mell. Mell appeals the trial court's grant of summary judgment in favor of Benchmark on the
issue of whether Benchmark was negligent or acting in bad faith in refusing to accept a
settlement offer from Mell.

Because Benchmark owed no duty to Mell and the insured did not assign her rights under
the insurance agreement to Mell, we find Benchmark had no duty to negotiate and settle with
Mell, and we uphold the summary judgment in favor of Benchmark for that reason.

Factual and procedural background

This action arose out of a tragic traffic accident in Franklin County. The following
summary of the accident is derived from the investigation report of the accident by Benchmark's
claim investigator.

On September 3, 2003, Candi, age 17, was driving a vehicle on a gravel road in rural
Franklin County, traveling approximately 80 miles per hour. The four passengers in the vehicle
were: Candi's brother, Dustin Atchison, age 12; Christina Vega, age 14; Kayla Mell, age 14; and
Levi Oakes, age 15.

Richard Hale had stopped his pickup truck on the gravel road and was observing nearby
hunters to insure they did not hunt on Hale's property. When Candi attempted to drive around
Hale's truck, she lost control of the vehicle and hit a bridge abutment, causing the car to catch fire
and turn over, landing on its top. The initial impact killed Vega. Oakes crawled out of the vehicle
and then pulled Mell and Dustin out of the vehicle as well. Two hunters who rushed to the scene
pulled Candi from the vehicle.

Oakes sustained second-degree burns to both forearms and his neck and fractured his left
shoulder. Oakes' medical bills were approximately $19,000.

Dustin suffered third-degree burns over 60% of his body, his left arm and his pelvis were
broken, and both feet were amputated because of severe burns. He was fitted with prosthetic legs
and will require future surgeries for scar revisions and modifications of the prosthetics. His
medical bills are in excess of $500,000.

Candi was severely burned over 40% of her body, her pelvis and her right ankle were
crushed. She will require more surgeries in the future for scar revisions, and her medical
expenses will exceed $500,000.

Mell was severely burned on her backside, and her medical bills have exceeded $400,000.

Candi was insured by Benchmark with a $25,000 bodily injury per person limit and a
$50,000 bodily injury per accident aggregate. An independent adjuster filed a detailed report of
the accident investigation on October 19, 2003, and at that point, Benchmark was aware it was
dealing with a death and serious injuries to multiple persons who continued to receive treatment
for their burns and injuries. Further, Benchmark was aware that the claims resulting from this
accident would likely exceed the $50,000 policy limit.

On January 7, 2004, Mell's attorney sent a demand letter to Benchmark, offering to settle
the case for the individual policy limit of $25,000 and giving Benchmark 30 days to accept the
offer.

In a letter dated January 23, 2004, Benchmark responded to Mell's settlement offer,
confirming the policy limits of $25,000 bodily injury per person and $50,000 bodily injury per
accident. The letter which was sent to Mell's attorney, as well as to the parents of the other three
minor children, stated:

"We believe that the total sum of all damages exceeds the available policy limits.
We
have an obligation to attempt to settle all of the claims presented against our insured, Candi
Atchison. We are hereby advising you that our total policy limits of $50,000 are available to
settle
claims that you or your child may have against Candi Atchison. We will require releases to be
signed.

"We would encourage all of you to communicate with each other to see if you can
arrive
at an agreement as to how these funds should be apportioned to each of you. We will also need
you to provide to us all available bills and medical reports. If you need assistance with this, we
can provide you with a medical authorization that will permit us to gather these ourselves.

"In the alternative, if an agreement cannot be reached, we will have to consider
filing an
action with the court and ask the court to decide how the $50,000 should be apportioned."

Mell's attorney responded by letter dated February 6, 2004, stating he was not "qualified"
to "contact the other injured claimants and develop an agreed settlement proposal."

On February 24, 2004, Benchmark filed an interpleader action in district court against the
parents of the three injured minor passengers and the one minor killed in the accident.
Benchmark submitted a sum of $50,000 as the policy limits of Candi Atchison's coverage and
requested the court's direction in allocating the funds among the three injured minors and the
heirs of Vega. Mell answered, asserting Benchmark acted negligently or without good faith in
failing to accept Mell's settlement demand, thereby exposing Benchmark to liability in excess of
the policy limits.

Benchmark filed a motion for partial summary judgment, disputing Mell's claim of
negligence or bad faith and requesting discharge from further liability. Mell also filed a motion
for partial summary judgment. The district court granted summary judgment in favor of
Benchmark, finding there were no disputed facts and Benchmark did not act negligently or in bad
faith in failing to accept Mell's settlement offer.

Following Mell's appeal of the grant of summary judgment, this court issued a show
cause order stating the appeal might be interlocutory if the claims of all parties had not been
determined. After receiving Mell's response, this court remanded the matter to the district court
for the limited purpose of conducting a hearing on the propriety of certifying the case as final for
appeal purposes pursuant to K.S.A. 60-254(b). The district court certified the issue on appeal as a
final judgment, holding there was no just reason for delay.

Standard of review

"Summary judgment is appropriate when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, show that there is no genuine
issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
The trial court is required to resolve all facts and inferences which may reasonably be drawn
from
the evidence in favor of the party against whom the ruling is sought. When opposing a motion for
summary judgment, an adverse party must come forward with evidence to establish a dispute as
to
a material fact. In order to preclude summary judgment, the facts subject to the dispute must be
material to the conclusive issues in the case. On appeal, [an appellate court must] apply the same
rules and where . . . reasonable minds could differ as to the conclusions drawn from the evidence,
summary judgment must be denied. [Citation omitted.]" Bracken v. Dixon Industries,
Inc., 272
Kan. 1272, 1274-75, 38 P.3d 679 (2002).

The trial court found no disputed facts. Where there is no factual dispute, appellate
review of an order regarding summary judgment is de novo. Roy v. Young, 278 Kan.
244, 247, 93
P.3d 712 (2004).

Existence of duty

In their appeal briefs, both Benchmark and Mell address the issue of whether Benchmark
was negligent or acting in bad faith in failing to accept Mell's settlement offer. Mell argues that
because her medical expenses clearly exceeded the $50,000 aggregate policy limit, Benchmark
acted negligently and in bad faith in failing to settle with Mell by paying the policy limit of
$25,000. Benchmark responds it did not act negligently or in bad faith because in filing the
interpleader action, it followed the procedures set out by the Kansas Supreme Court in
Farmers
Ins. Exchange v. Schropp, 222 Kan. 612, 567 P.2d 1359 (1977). Benchmark further
alleges
Mell's argument was prompted "only out of greed" and showed bad faith on her part.

The case law cited by both parties discusses the legal principle that an insurer owes
to its
insured the duty to act in good faith and without negligence. This duty arises under the
contract.
See Associated Wholesale Grocers, Inc. v. Americold Corp., 261 Kan. 806, 845, 934
P.2d 65
(1997). However, in this case, Mell is a third-party claimant, not an insured of Benchmark; nor is
there evidence indicating Candi assigned her claims to Mell.

Thus, following briefing but before oral argument, this court issued an order requesting
the parties to address the issue of whether Benchmark owed any duty to Mell directly or whether
the insured, Candi Atchison, had assigned any rights under her insurance policy with Benchmark
to Mell. The court requested that the parties either file supplemental briefs or be prepared to
address the issue in oral argument. Both parties submitted supplemental information to the court
and responded to the issue at oral argument.

In considering the issue of whether Benchmark owed a duty to Mell, it is instructive to
review the cases cited by the parties in support of their arguments as to the merits of the
negligence/good faith issue settlement and, particularly, to consider the status of the insured in
each case.

Both parties cite Schropp, 222 Kan. at 613-14, in support of their opposing
arguments as
to the existence of bad faith. There, a two-car collision killed the driver of a vehicle, Clint R.
Sohl, an insured of Farmers, and injured several passengers including Schropp. Schropp incurred
medical bills exceeding $26,000 and made formal settlement demand to Farmers for payment of
the policy limits with a 10-day time frame. As in this case, the policy limits were $25,000 per
person and $50,000 for each accident.

Farmers made no settlement offers to any party, even though Farmers was aware its
insured was at fault, there was no evidence of contributory negligence, and Schropp's medical
expenses alone exceeded its policy limits; instead, Farmers claimed that Sohl was not negligent
and denied Schropp's claims. Farmers then filed a petition for declaratory judgment in district
court, naming the injured passengers in the vehicle as well as the parents of a minor passenger as
defendants. At the time it filed the declaratory judgment action, Farmers paid $50,000 into court
and asked the court to determine its rights and those of the defendants.

Significantly, in Schropp, the district court found Sohl's estate to be a
necessary party and
granted Schropp's motion to join the estate as an additional party defendant. Additionally,
Schropp counterclaimed against Farmers and cross-claimed against Sohl alleging Farmers
handled his claim in bad faith in violation of its duties to the insured. The administrator of Sohl's
estate also filed a counterclaim against Farmers alleging Farmers acted negligently and in bad
faith in handling Schropp's claim.

The jury ultimately found Farmers acted negligently or in bad faith "toward its insured" in
handling Schropp's claim, and the court awarded damages in favor of Sohl's estate and Schropp.
On appeal, the Kansas Supreme Court concluded that "there was substantial competent evidence
to support the jury's finding that Farmers acted negligently or in bad faith toward its
insured in
the handling of the claims arising out of the collision." (Emphasis added.) 222 Kan. at 621.

Benchmark points out that it followed the procedures recommended by the court in
Schropp when it filed this interpleader action and payed its policy limits into court.
Thus,
Benchmark urges us to find as a matter of law that it did not act negligently or in bad faith in
refusing to settle Mell's claim. However, the facts here are unlike those in Schropp,
where the
insured (1) was a party to the declaratory judgment action, (2) was the subject of a cross-claim by
Schropp, and (3) had counterclaimed against Farmers alleging breach of the duty owed to the
insured under the policy.

In contrast to the procedural setting in Schropp, the insured here was not a
party to the
interpleader and had not assigned her rights to the claimant. Further, the issue of whether
Benchmark was negligent or acted in bad faith toward the insured in refusing to settle with Mell
was never raised or argued. Moreover, while Schropp was awarded damages in the declaratory
judgment action filed by Farmers, the basis for the judgment was Farmers' negligence and bad
faith toward its insured in handling the claims arising out of the collision.

In Levier, a car driven by Koppenheffer collided with a truck driven by
Levier, who was
seriously injured in the accident. Koppenheffer's insurer, AEtna Casualty and Surety Company
(AEtna), concluded Koppenheffer was 95-100% at fault. Levier's claim was estimated to be
$2,120,000, and the other passenger's claim was approximately $50,000.

AEtna settled with the other passenger for $25,000 but failed to respond to Levier's
settlement offer for $100,000. AEtna paid the balance of its policy, $71,900, into the district
court in an interpleader action, and the sum was eventually paid to Levier. Levier obtained a
consent judgment against Koppenheffer for $600,000, and Koppenheffer assigned all claims
against AEtna to Levier. Levier then filed a garnishment action against AEtna.

The district court in Levier held AEtna was negligent in two respects:
preferential
treatment of the other passenger claimant and failure to timely advise Koppenheffer of Levier's
settlement offer. This court affirmed these holdings, finding AEtna breached its duty of good
faith to its insured and was liable for the full amount of Koppenheffer's resulting loss. 19 Kan.
App. 2d at 975-80.

Significantly, Levier was awarded damages, not because of any breach of a duty owed to
him but because Aetna breached its duty to its insured, Koppenheffer,
who had assigned his
rights to Levier. Here, Candi Atchison did not assign her rights under the insurance contract to
Mell, and Candi was not a party to this interpleader action. Simply stated, an insurer has no duty
to reasonably negotiate and settle with a third-party claimant where there is no contract (or
assignment of policy rights) between them.

Other jurisdictions have held as a general rule that third parties who are strangers to an
insurance contract cannot maintain an action against an insurer for the failure to negotiate and
settle a third party's claim against the insured because the duty of good faith and fair dealing in
the handling of claims runs only from the insurance company to its insured. See, e.g.,
Linscott v.
State Farm Mutual Auto. Ins. Co., 368 A.2d 1161, 1163-64 (Me. 1977); McWhirter
v. Fire Ins.
Exchange, Inc., 878 P.2d 1056, 1058-59 (Okla. 1994); Larocque v. State Farm
Insurance
Company, 163 Vt. 617,618-19, 660 A.2d 286 (1995).

In this case, the trial court found no negligence or bad faith in Benchmark's dealing with
Mell, apparently assuming Benchmark owed a duty to Mell. However, because no duty was owed
as a matter of law, summary judgment was appropriate. See Hall v. Kansas Farm
Bureau, 274
Kan. 263, 273, 50 P.3d 495 (2002) (the reason given by the trial court for its ruling is immaterial
if the result is correct).